WASHINGTON–August’s disappointing jobs report isn’t likely to be a harbinger of employment numbers to come, according to one CU economist, who also weighed in on the increasing minimum wage some credit unions are now paying.
As CUToday.info reported, the Bureau of Labor Statistics reported just 235,000 jobs were added back to the economy in August, the lowest number since January of this year and below the expectations of most forecasters.
Nearly a year and a half into the recovery, the U.S. economy remains 5.3 million jobs short of where it was in February 2020. During August, 5.6 million people said they hadn't been able to work or worked reduced hours because their employer was affected by the pandemic.
Despite the low numbers, the unemployment rate fell to 5.2% in August from 5.4%, according to the Bureau of Labor Statistics.
“I don’t think the jobs report from Friday was significantly altered my forecast going forward, especially in the labor market,” said NAFCU’s chief economist, Curt Long. “I think there are still so many people out of work right now, and we have such a long way to go. I think we’ll probably bounce back next month and continue to make decent progress.”
‘Big Money Multiplier’
Long acknowledged much attention has recently been paid to a move by Goldman Sachs to lower its third-quarter U.S. growth forecast to 5.5% from 9%, although the company also raised its expectations for the next four quarters. Goldman Sachs’ revised forecast implies 2021 growth of 6% on a full-year basis, vs. 6.4% previously, and 2022 growth of 4.5% vs. 4.4% previously.
Long pointed out NAFCU had also lowered its forecast several weeks ago, and said numerous variables remain on the horizon affecting all forecasts.
“The combination of the Delta variant, plus having not gone over this unemployment benefits cliff this weekend, that is money that has a big multiplier to it,” said Long. “(The unemployment) money being spent in the economy. That fact is we’re probably now on the other side of that.”
Rising Minimum Wage
One issue of concern to many credit unions is hiring and retaining staff, especially on the front lines. The pressure has been so strong many CUs have announced higher and higher starting minimum wages, including most recently, Glendale, Ariz.-based Credit Union West, which said its minimum wage will be $20 an hour.
But it isn’t credit unions driving these kinds of increases, said Long.
“I think my read on the research is that the several really large employers in this country really drive the effective market minimum age. It’s the big retailers setting the price for everyone,” he said. “Even within depositories, it’s the large institutions our members are competing with for talent. What they do really makes a difference. I’ve heard lots of our members, for instance, refer to what (Bank of America)is doing, and that is just the reality.”
As CUToday.info reported here, Bank of America has announced plans to boost its minimum wage to $25 an hour by 2025.